As a growing number of start-ups attract financing, it is difficult not to get the impression it represents a major accomplishment or victory. When a start-up announces that it has completed a deal, it is cause for celebration and congratulations from friends, colleagues and the community.
It’s great to see a more fertile financing landscape for start-ups but all the fuss has, in some respects, overshadowed the importance of entrepreneurs being able to successfully bootstrap a business with little or no venture capital.
In a recent blog post, Brad Feld provided a good reminder about bootstrapping in talking about a friend/entrepreneur who was “much more focused on ramping up his customers than raising money”. Feld, co-founder of TechStars, which provides financing to start-ups, was trying to remind everyone about the value of bootstrapping to grow a business.
I have come across some entrepreneurs who appear to have forgotten this reality because they have pinned their hopes on launching and growing a business on getting financing. The advice I offered to one entrepreneur with financing aspirations was simple: “Get your product launched and start selling”. I was trying impress upon him that having sales and customers who wanted his service was valuable because it would get the business off the ground and, as important, make it easier to raise financing when and if needed.
As much as venture capital is great, valuable and sexy, it is difficult not to be impressed with entrepreneurs who can establish and grow a business without it. Not having financing forces you to be creative, agile and flexible, and forces an entrepreneur to make smart decisions because a strategic or tactical mistake can be lethal. For entrepreneurs who succeed while bootstrapping a business, there is a different sense of accomplishment.
There are, of course, many situations in which bootstrapping can only get a business so far. At some point, a business needs financing to take things to the next level. But I think bootstrapping should get as much as attention and be seen as just as much of an accomplishment as raising venture capital.